Warsh Nomination Hawkish Fed Bets
The nomination of Kevin Warsh as Fed Chair is seen as supportive for an independent Fed and low inflation, which is bearish for T-note prices.
Too little corroboration in the last 3 days to call a trend (21 articles). Watching for it to gain traction.
Mainstream financial press is carrying this — attention has broadened beyond specialist outlets.
"Warsh appeared ambivalent about the Fed's 2% inflation target during his press conference last week after the central bank left interest rates on hold, which unnerved the bond market. The 'term premium,' an estimate of the extra compensation investors demand for buying 10-year Treasuries, spiked sharply in response."
"Warsh's convoluted messaging adds to the uncertainty. He indicates a broader perspective on inflation but provides vague details about achieving price stability. Market reactions suggest concerns that his unclear strategies could risk the Fed's credibility, demanding more assertive future actions."
"The new Chair Kevin Warsh believes in smaller Fed balance sheet. That shrinks liquidity. Players may take note of the new conductor of markets symphony."
"But Warsh's tough talk raises expectations that he will follow through with action, current and former Fed officials say. James Bullard, a former president of the St. Louis Fed, said Warsh's rhetoric 'has been very effective' in establishing Fed credibility, 'but markets are going to ask, Well, what have you done for me lately? And they're going to demand action.'"
"According to Citadel Securities, the US Fed may deliver a surprise rate hike this week, in-line with new Fed Chair Kevin Warsh's price stability pledge. A rate hike this week would not only establish the credibility of the new Fed Chair, but also reiterate the Fed's independence."
""The members of our Committee have no tolerance for persistently elevated inflation," he said. "And we share a resolute commitment to restoring price stability." CME Group's FedWatch tool is showing a 90% probability that the fed funds rate will be higher at the end of this year."
"During a news conference June 17, Warsh emphasized that the Fed will return inflation to its 2% target, which it has missed for more than five years. His comments were interpreted by economists and Wall Street investors as evidence that the Fed may hike rates later this year."
"Kevin Warsh is the newly installed chairman of the U.S. Federal Reserve, and the start of his era has already caught investors off guard with a hawkish first meeting that raised prospects for near-term interest rate hikes... Higher rates translate into higher borrowing costs and also could pressure equities by making bonds more competitive investments."
"Traders are increasingly betting on a second interest rate hike by the U.S. Fed by December, according to LSEG data, compared to expectations of just one 25-basis-point hike two weeks ago, as investors price in hawkish monetary policy under new Chair Kevin Warsh."
"Traders are increasingly betting on a second interest rate hike by the U.S. Fed by December, according to LSEG data, compared to expectations of just one 25-basis-point hike two weeks ago, as investors price in hawkish monetary policy under new Chair Kevin Warsh."